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Iran, pummeled by years of international sanctions, has had two energy goals.

First, to preserve its dwindling international hydrocarbon market share, increasingly battered by years of U.S. and UN sanctions designed to slow down and halt its civilian nuclear energy program, which Washington and Tel Aviv have long insisted masks a covert program to develop a nuclear weapons program.

The second, much less reported in the foreign press, is to diversify its indigenous energy infrastructure, so as to preserve its hydrocarbon assets for the long term.

In pursuit of the latter goal, Iran is ramping up its hydroelectric program.

Iran currently has 23 operational hydropower plants, with a combined electricity generating capacity of 8.2 gigawatts, 14 percent of the nation’s total generating capacity of 58.5 gigawatts. A further 4.8 gigawatts of capacity is under construction, with 12.7 gigawatts of hydro capacity is either undergoing feasibility study or in the early design stages.

The centerpiece of Iran’s hydroelectric ambitions is the $1.5 billion Bakhtiari Dam and Hydroelectric Power Plant in southwest Iran across the Bakhtiari River in the Zargos mountains in Iran’s western Lurestan province, with a capacity of about 169 billion cubic feet of water.

Due to open in 2014, the Bakhtiari Dam HPP will be the tallest dam in the world at 1,033 feet, surpassing China's 1,000 foot Jinping-I Hydropower Station. The Bakhtiari HPP will be a double-arch concrete dam, creating a reservoir with an area of 5,900 hectares, with six 250 megawatt turbines providing a generating capacity of 1.5 gigawatts.

Feasibility studies for the Bakhtiari Dam HPP began in 1996, but ongoing problems saw a design team comprising Iranian and Swiss consultancies appointed in May 2005. The most notable delay was caused by the 2002 liquidation of the German contractor originally appointed to build the scheme. Tightening international sanctions made Tehran’s efforts to secure international financing more and more strained.

Enter the Chinese, with Sinohydro and Iran’s Faban taking over the project in 2007, with Chinese banks to provide the estimated $2 billion financing. Two years ago a Tehran-based consulting engineer noted, "For the past year, with the financial sanctions, it has been difficult to purchase equipment for hydro projects here. Projects have been pretty much limited to using Chinese manufacturers or trying to make parts locally. This has slowed down a number of schemes, especially those that have had to change their equipment specifications midway through construction. Nonetheless, they are moving forward. Sanctions have just meant that projects won't necessarily have the best equipment installed and may take longer and cost more."

Iran Water & Power Resources Developer Co. is overseeing the Bakhtiari Dam HPP. Since being established in 1989, IWPCO has been responsible for the construction of all new hydropower plants in Iran.

Interestingly, IWPCO remains coy about who will manufacture the facility’s turbines. The IWPCO website states about the electrical generation power facilities, “type of generators,” only the cryptic comment, “being designed.”

Two years ago, China’s Sinohydro Corp, constructor of China’s massive Three Gorges HPP, signed a contract to construct the Bakhtiari Dam HPP, Iran’s the state-owned Assets Supervision and Administration Commission (SASAC) reported, with a projected timeline of five years to complete.

Well, something disrupted the deal, though neither side is saying, as last June Iran's government decided to withdraw from the deal, which analysts believe may be linked to the dissatisfaction of Iran's central bank with loan options issued by the Chinese.

Showing some admirable bravado, IWPCO’s Mohammad-Reza Rezazadeh stated that Iran is considered among the most advanced countries in dam construction and engineering.

So, will Iran’s indigenous industrial base be able to pull off the Bakhtiari Dam HPP without either Chinese expertise or funding? Given that China is currently Iran’s largest export market for oil exports, no doubt there will be some more “frank and candid” discussions, little if any of which will leak to the Western press.

So the heading of this article is perhaps a little 'premature'? More like 'Iran plays hardball with China with a view to renegociating terms of Chinese assistance'...?

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